SNPS vs. MRVL: Which Stock Has an Edge in the Interconnect Market?

Synopsys SNPS and Marvell Technology MRVL are two leading players in the AI Cluster and Data Center interconnect market. Per a report by MarketsAndMarkets, the data center interconnect market is projected to reach $25.89 billion in 2030 from $15.38 billion in 2025, witnessing a CAGR of 11%.

Both SNPS and MRVL have the potential to capitalize on this industry momentum. With this strong industry outlook, the question remains: Which stock has more upside potential? Let’s break down their fundamentals, growth prospects and market challenges for both SNPS and MRVL.

The Case for SNPS Stock

Synopsys is capturing the AI cluster interconnect market with product launches, including Ultra Accelerator Link and Ultra Ethernet IP solutions. The UALink IP solution offers a throughput of 200 Gbps per lane, which means SNPS’ customers can now scale up to 1,024 AI accelerator links fast and enjoy low latency, high bandwidth, and advanced memory sharing features.

Synopsys’ Ultra Ethernet IP, on the other hand, is focused on helping SNPS’ customers to build AI scale-out networks by connecting millions of nodes and using MAC and PCS controllers, PHY, and verification IP. These products will maximise bandwidth at data rates up to 1.6 terabytes per second.

With all these offerings in its portfolio, SNPS is set to capitalize on the growing HPC and AI market, which requires high-speed, low-latency interconnects to link accelerator clusters. Synopsys is well-positioned to benefit through its Ultra Ethernet and UALink IP solutions as it deploys them in combination with its established EDA tools, PCIe, and Ethernet IP interconnect technologies.

However, SNPS faces competitive pressure from the Ultra Ethernet Consortium and companies like Broadcom and Marvell Technology. Some of these rivals have the capability to vertically integrate their chips and network to reduce reliance on third-party IP. SNPS’ Design IP business also declined 8% year over year due to foundry customer delays and internal resource allocation missteps.

These factors contributed to affecting both top and bottom lines and the company’s faiure to meet analysts’ expectations in the third quarter of fiscal 2025. The Zacks Consensus Estimate for SNPS’ fiscal 2025 earnings is pegged at $12.8 billion, indicating a year-over-year decline of 2.8%.

The Case for MRVL Stock

Marvell Technology is an established player in the data center connectivity market with its extensive portfolio of products like Active Copper Cable Linear Equalizers, Digital Signal Processors, Active Electrical Cables, ethernet switch and co-packaged optics as AI workloads demand faster connectivity.

The company is now entering into the data center interconnect market with COLORZ 800G ZR/ZR+ for Multi-Site AI Training, which is the first of its kind 800 Gbps ZR/ZR+ coherent pluggable optical module for providing scalable and cost-optimized transmission up to 2,000km. As MRVL included the COLORZ 800G ZR/ZR+ module in its portfolio, it will give a boost to its networking and carrier infrastructure segments’ top-line growth.

Marvell Technology’s enterprise networking and carrier infrastructure segments are also showing strong recovery. In the second quarter of fiscal 2026, enterprise networking revenues climbed 28% year over year to $194 million, while carrier infrastructure grew 71% to $130 million.

These factors will contribute to MRVL’s top-line growth. Marvell Technology initiated strong revenue guidance for the third quarter. It expects revenues to be $2.06 billion (+/- 5%). The Zacks Consensus Estimate for Marvell Technology’s third-quarter fiscal 2026 revenues is pegged at $2.06 billion, indicating year-over-year growth of 35.9%.

The Zacks Consensus Estimate for Marvell Technology’s fiscal 2026 and 2027 earnings implies year-over-year growth of 78.3% and 19.2%, respectively

Stock Price Performance and Valuation of MRVL and SNPS

Year to date, Marvell Technology shares have plunged 25.1% and SNPS stock has lost  6%.

MRVL is trading at a forward sales multiple of 7.88X, way above its median of 7.40X, over the past year. SNPS’ forward sales multiple sits at 8.76X, significantly below its median of 11.04X over the past year.

Conclusion: MRVL vs. SNPS Stock

Although both Marvell Technology and Synopsys are set to capitalize on the data center interconnect market, weakness in SNPS’ Design IP business, rising competition and shrinking margins make it less attractive compared to MRVL, which now has the capability to vertically integrate its chips and network to reduce reliance on third-party IP providers like SNPS.

Marvell Technology also carries a Zacks Rank #3 (Hold) compared to SNPS’ Zacks Rank #5 (Strong Sell), giving it an edge over the latter at present.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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